Vivendi's pursuit of video game publisher Ubisoft has crossed another threshold — and a hostile takeover battle is looking a lot more likely.
The French media conglomerate has increased its ownership stake in the company behind titles such as "Assassin's Creed" and "Tom Clancy's Rainbow Six Siege" to 25.15 percent of the outstanding stock. According to French law, once a buyer owns more than 30 percent of a company's shares, they must make an attempt to purchase a controlling stake for a reasonable price.
Vivendi, in a filing with the Autorite des marches financiers, the French securities regulator, said it is "not considering" a public tender offer or acquiring control of the company.
Industry observers remain skeptical of this claim, though, given its hostile takeover in June of Gameloft, a mobile game studio that was founded by the Guillemot brothers, who also started (and control) Ubisoft. Vivendi, in its filing with the regulator, also said it may continue to buy shares depending on market conditions.
Ubisoft, in a statement, made it clear again that Vivendi's interest in the company is unwelcome.
"This is another indication that Vivendi is continuing its ill-advised and value-destructive approach of attempting to take creeping control of companies like Ubisoft," the company said. "As we've said previously, we are undeterred by these actions and remain focused on providing the best experiences to our players and fans, and to delivering long-term value for all of our shareholders."
Three months ago, Ubisoft won a key battle against Vivendi at its annual meeting, avoiding a battle over who would serve on the board of directors. (Vivendi, despite saying previously that it wanted a presence on the board, did not make any nominations.)
The company's games have been performing well, with revenues often beating expectations, but overall sales in the video game sector this holiday season have not been as strong as expected. (Even venerable franchises, like Activision's "Call of Duty," are showing softness.)
If Ubisoft's holiday titles (which include "Watch Dogs 2" and "Steep") underperform financially, that could impact the company's share price early next year.
Ubisoft has been working tirelessly to shore up investor support in case Vivendi does launch a hostile bid for the company, issuing detailed long-term financial forecasts and meeting with large stakeholders individually. In June, however, CEO Yves Guillemot said if that hostile offer does come, Ubisoft would consider seeking a bid from another video game publisher, as it believes that course of action would be better long term for the company.
"We have Plan A and Plan B," said Guillemot, who is also co-founder and chairman of Ubisoft. "Plan A is to remain independent. Plan B is going with another group, either in the game industry or with a technology or other types of company. Those are the two options at this point and they are both still open."